Acquiring the right property is essential for any real estate business to thrive. The same principle applies to Airbnb investing. Being an excellent property manager or host also matters. However, those qualities will only help you turn a huge profit with an investment into the right property.
So, how do property investors find the right Airbnb property? Simple, they know what to look out for. Keep reading to learn what to look for when buying an Airbnb property.
Does Airbnb Qualify as an Investment Property?
An Airbnb property qualifies as an investment because it’s rented out after purchase. Investing in an Airbnb property is a great way to earn passive income. Unlike conventional long-term rentals, with an Airbnb you can host multiple guests in a month. With the right Airbnb investment, you may end up making much more than the traditional landlord.
Through the rise of Airbnb, the travel industry is forever changed. Guests can find a home away from home, and hosts can earn extra money. Most guests end up wondering themselves what it would feel like to be a host. That’s because the profits earned are appealing.
Good news! You don’t have to be a pro at real estate investing to have a profitable Airbnb business. You only need to find the right property, furnish it, and be a great host. The first step for people looking to join the Airbnb business is buying the right investment property.
Is Airbnb a Good Investment?
Airbnb is gaining popularity worldwide, especially in the United States. As a real estate investor, you should consider joining this booming industry to add to your sources of income. However, like many other investors, you may wonder if Airbnb investment properties are worth investing in. To answer that question, you must consider the pros and cons of owning and operating an Airbnb property.
Airbnb Offers High Returns
One of the major benefits of investing in an Airbnb business are the high returns they offer. Unlike long-term rentals, you can charge a nightly, weekly, or monthly rate with an Airbnb rental. Thus, it’s easy to earn way more than the typical landlord with consistent hosting.
Flexible and Available for Living and Renting
Another advantage of an Airbnb business is the flexibility it offers. You have the option of blocking out some dates and staying at the property yourself. Some people even rent out their primary home when on vacation. Generally, with an Airbnb investment, there’s more flexibility in how people use the property.
Payment Collection Made Easy
Lastly, with an Airbnb property, you don’t have to collect payment from guests. Airbnb handles that for you through their app and website infrastructure, which is easy to navigate
What Are the Disadvantages of Owning an Airbnb?
People looking to buy an Airbnb should be aware of both pros and cons of doing so. Here is a closer look at the cons.
High Initial Investment
The initial investment into an Airbnb property can be pretty high. In addition to buying a property, you must furnish it, buy some essentials, and pay for utilities. You might also need to pay for some subscriptions. However, many real estate investments also suffer from this con of a steep startup cost – so it shouldn’t be that surprising.
Must Buy Quality Furnishings & Maintain Good Reviews
Whatever you do, do NOT buy poor-quality furniture to save on cost. Doing so will affect your guest return rate and the reviews they leave. Instead, find good quality pieces for the right value. Furnishings do not have to be expensive to work perfectly for you and your guests, so do a little research and find bargains. Most of all, you want your guests to enjoy their stay and spread the word about your property. Properly furnishing the space and making it cozy will help with that.
No Guarantees on Cash Flows
Another disadvantage is that there are no guarantees when you start an Airbnb business. Unlike a long-term rental, there’s no certainty about how much you’ll earn monthly. Thus, cash flow planning might be difficult.
Slow Starts on Airbnb’s Marketplace (Choose a Good Location!)
Attracting guests when you’re starting can take time and effort. At the start, you may have zero or a few reviews. Thus, people will be hesitant to book a stay at your Airbnb rental. Knowing what to look for when buying an Airbnb property can help with this situation. You’ll know to pick a property in a good location, thus attracting guests regardless of your review count.
How To Invest in Airbnb
Investing in Airbnb and getting good returns requires you to play your cards right. You must own the right Airbnb investment property in the right location. To find such a property, start by researching different markets. Compare them to find an area and property that aligns with your investment goals.
Learn Local Laws and Regulations
As you research different markets, pay attention to the laws and regulations. Make sure you understand the law on taxation and occupancy limits. Also, check if the area has any specific zoning laws that may affect your business.
Research Rental Sales & Use Online Property Calculators
After looking at different markets and choosing a city, it’s time to look at rentals on sale. It would help if you considered the income potential of each property before making a choice. A good way to do that is to use an online calculator. All you have to do is input the property’s address. The calculator will return the estimated yearly revenue and occupancy estimates.
Balance Your Pricing
Once you choose a property, price it properly. The profitability of your Airbnb business depends on it. The price may fluctuate depending on the season and supply and demand. Do your research and try to strike the balance between affordability for your guests and high profitability for you.
How To Find an Airbnb Investment Property
Are you looking into buying a house for Airbnb? If you’re like most people, you may not know where to begin. Start by looking into different locations and their Airbnb compatibility (laws and demand). Choose an area whose Airbnb rules and regulations don’t affect your earning potential. As a real estate investor, you know the importance of location.
Location, Location, Location
The location of your Airbnb business will determine its occupancy rate. Obviously, you’ll likely get more guests and revenue with a good location. Make sure to include the property type when considering what to look for when buying an Airbnb property. Pick a property type that’s suitable for your target guests. For example, business travelers might enjoy a condo or apartment within the city. And most guests appreciate nearby events and attractions to explore.
Plan Comprehensive Budget
Come up with a comprehensive budget before purchasing a property. Only buy a property that goes within your budget. You may be unable to make mortgage payments on it. As you create a budget, remember to include the cost of insurance, property taxes, and fees. Properly budgeting and sticking to your budget will go a long way for your investment’s ultimate potential.
Do Price Comparisons & Review Recent Transactions
Ensure you analyze the property options you end up with. Start by identifying a couple of properties similar to the ones you want. Select those properties that got sold recently. Compare the prices to find the fair market value of your Airbnb. Doing so will safeguard you from overpaying for the property. Remember that a huge factor in profitability is your starting cost.
Is It Beneficial To Work With a Real Estate Agent?
Most people wonder if it’s worthwhile to work with a real estate agent to buy an Airbnb property. It is! An agent understands the Airbnb laws and regulations in a specific area – and they will help you understand the sometimes complex legal language as well. They can also help you select the best property type and location.
A good real estate agent has outstanding negotiation skills. They can help you get a great deal, better than what you may have gotten alone. An agent can also access private listings that aren’t on the public market yet.
Ultimately, a real estate agents job is to help you manage the cons of an Airbnb while elevating the pros. Ensure you work with an agent who has experience with Airbnb rental properties — like us!
At our firm, we offer a free consultation. It’s our promise that we will look out for your interests and seek to maximize the profits of your real estate investment. Given we work with all kinds of investors and have a reputation to uphold, we will only provide advice that we know will be advantageous to you.
If you choose to work with, know that you are choosing to work with experts that will help your Airbnb investment flourish.
Here are some common questions people ask about buying an Airbnb property
Is owning an Airbnb profitable?
An Airbnb rental with a steady stream of guests can be very profitable. It can even bring in more money than renting the property long-term to someone. Airbnb rates are higher than what a landlord charges, affording investors higher profit potential.
Your monthly income from having an Airbnb property can range between a couple hundred to thousands of dollars. Set yourself up for success by having a property in the right location. Also, be a good host, provide expected amenities, and always use accurate, quality photos of the space.
How much money do I need to start an Airbnb?
On average, you need $6,000 to set up an Airbnb rental. Remember, this is an average figure. The cost may vary across different locations. There are some common costs to consider when determining how much you need to start an Airbnb business: the cost of purchase, insurance, furnishing the space, and utilities. Also, account for the cost of decorating, buying consumable goods, and TV streaming subscriptions.
How much do Airbnb hosts make on average per month?
Airbnb hosts make an average of $924 every month. What you earn may be lower or higher than the average amount. It depends on a variety of factors. These include the property’s location, the quality of the space, and the services you offer.
Conclusion: Airbnb can be a Great Investment
Investing in real estate allows you to earn money both in the short and long term. Airbnb properties are becoming one of the most popular real estate investment options. These short-term rentals can offer higher profits than traditional long-term ones – and provide you with the flexibility to live there yourself and choose your own hosting schedule.
Finding the right property is the secret to success when investing in Airbnb rentals. Now you know what to look for when buying an Airbnb property. Don’t hesitate to contact us for free information about profitable Airbnb investment properties in your area today!